India Rejects US Claims Of Excess Capacity In Textiles And Steel

India has pushed back against assertions in a US trade investigation that the country has excess production capacity in its textiles and steel industries, arguing that its output is driven by domestic consumption rather than structural oversupply.

The response comes amid a broader review by the US Trade Representative (USTR) under Section 301 of the US Trade Act, which is examining whether certain countries benefit from subsidies or other measures that distort global trade.

According to a report by Reuters, Additional Trade Secretary Amitabh Kumar said that India does not maintain surplus manufacturing capacity in either sector.

He noted that India’s production levels in textiles and steel must be viewed in the context of the country’s vast population and rising demand.

On a per‑capita basis, both production and consumption remain significantly lower than in many developed economies, Kumar added, rejecting the notion that India’s output automatically translates into excess capacity.

The Indian export promotion council for cotton textiles, TEXPROCIL, has also challenged the US allegations by submitting a detailed response to the USTR.

The industry body emphasised that more than 80% of India’s cotton textile production is consumed domestically, leaving only a limited share for export markets.

TEXPROCIL argued that production trends across cotton, yarn and fabric segments have been flat or slowing in recent years, undermining claims of a rapid build‑up of capacity that could distort trade.

Separately, the Ministry of Commerce filed representations on behalf of affected sectors, rejecting both the excess capacity claims and assertions related to forced labour in India’s cotton textile value chain.

The US initiative was launched after authorities cited India’s trade surplus with the United States and flagged a range of sectors, including textiles, steel, petrochemicals, health products and automotive goods, for investigation.

The notice also mentioned India’s solar manufacturing industry, arguing that installed production capacity exceeds domestic demand.

India’s rebuttals aim to counter the narrative that it gains an unfair structural advantage in these industries, stressing that its manufacturing landscape is shaped by internal consumption patterns and developmental imperatives rather than export‑led overcapacity.